Dollar flat ahead of CPI

The dollar index eased 0.09% to 101.18

The dollar steadied on Tuesday ahead of ​U.S. inflation data, with Middle East tensions lifting oil prices.

The dollar index eased 0.09% to 101.18.

Inflation risks remain in the spotlight with the release of U.S. June CPI data on Tuesday, June PPI gauges the following day, and central bank Chair Kevin Warsh’s first semiannual testimony before Congress.

Concerns ​over escalating tensions between Iran and US returned to the fore, with the U.S. president saying on Monday Washington was reinstating a ​naval blockade on Tehran and would ensure the Strait of Hormuz remained open for a fee following latest exchanges of strikes.

Iran and U.S. exchanged heavy assaults at the weekend, with Tehran striking U.S. facilities ​on Sunday and saying it had again closed the vital Strait of Hormuz shipping route.

Oil prices jumped almost 3% on Tuesday to their highest point in four weeks ​after the U.S. said it would reimpose a naval blockade, heightening uncertainty about energy flows.

Central bank Governor Christopher Waller said rates may need to rise in the near term if data shows inflation remaining well above the central bank’s 2% target.

A core CPI reading of 0.3% or higher ​would likely imply, depending on PPI data due later in the week, that the central bank’s preferred core PCE deflator is also running at 0.3% or ​above, said Ray Attrill, head of FX strategy at National Australia Bank, in a podcast.

That may well be a trigger for a Fed rate hike as early as the ‌July meeting, ⁠Attrill said.

Economists’ median estimate for the June core CPI was 0.2% growth month-on-month.

Fed funds futures are pricing in around 43 basis points of rate hikes by the central bank this year, according to LSEG data.